Four out-of-town buyers have purchased local apartment complexes in recent weeks amid turmoil in the multifamily sector as it struggles with its lowest occupancy rates since shortly after the Great Recession.
Two of the complexes, both on the North Side, were sold after going into foreclosure: the Canopy on East Bitters Road and Summit at Salado Creek off Wurzbach Parkway. The seller of another of the complexes, Aspire Apartments on the near Northwest Side, had been in financial distress, according to media reports.
“2023 was not friendly to the San Antonio apartment market, and the fourth quarter was particularly unkind,” the analysis firm Austin Investor Interests said in its most recent report on the sector, noting that the occupancy rate for local complexes fell to 89.5 percent in the fourth quarter — its first time dipping below 90% since 2010.
Apartment foreclosures
In the case of the Canopy, an affiliate of the Voya Financial investment firm of Atlanta bought the complex in a foreclosure sale from an entity linked with Amplitude Equity, a real estate firm that owns complexes across the U.S.
The purchase price was $18 million, Bexar County property records show. Voya had loaned the Amplitude entity $21.7 million to buy the complex in 2022.
Kris Kagel, a senior manager with Voya Financial, declined to comment. Eliza Zhang, Amplitude’s founder, didn’t respond to a LinkedIn message seeking comment.
With Summit at Salado Creek, an entity linked with Madera Residential of Lubbock bought the complex from a firm linked with Benefit Street Partners of New York, which had taken it over after its prior owner, DB Capital Management of Colorado, defaulted on a $45 million loan it had taken from Benefit Street in 2021 to buy the complex, according to the San Antonio Business Journal.
Emails and phone calls seeking comment from Benefit Street and DB Capital weren’t returned.
Other multifamily purchases
In the most recent of the transactions, an entity linked with the Chicago investment firm 29th Street Capital bought the Renata complex, on Fredericksburg Road across from USAA’s headquarters, on Feb. 21 from the firm Knightvest Capital of Dallas. The purchase price was undisclosed, but 29th Street took a $19.7 million loan from the Maryland investment firm Walker & Dunlop as part of the transaction.
29th Street didn’t respond to a phone call to its marketing department seeking comment.
Aspire Apartments, on Bandera Road on the near Northwest Side, was purchased on Feb. 12 by the Crossroads Housing Development Corp. of the West Texas town of Big Spring. It had been owned by GVA, a multifamily investment firm in Austin.
Crossroads took a $21 million loan from Greystone, the New York real estate firm, to buy Aspire, county records show.
GVA has recently been delinquent on adjustable-rate loans it made to buy properties in San Antonio during the COVID pandemic, according to reporting by the San Antonio Business Journal. In November, it defaulted on a $25.3 million loan secured by Melia Apartment Homes on the Northwest Side.
Representatives of Crossroads and GVA didn’t respond to requests for comment.
Struggles in local apartment sector
San Antonio’s multifamily sector has struggled recently in an environment of sagging rents and rising interest rates. In the fourth quarter of last year, the average rent for a local apartment was $1,211, down 4.4% from $1,267 a year earlier, according to the Austin Investor Interests report.
In the fourth quarter, the local sector continued “the free-fall that has been the theme of 2023,” the report said.
One of the factors pushing down rents was an increase in concessions being offered by landlords, the report said — in other words, temporary deals meant to entice potential tenants. The rise in concessions has led some tenants to “property hop” in search of better deals, it said.
After the local market saw a record number of sales of apartment complexes in 2021 and 2022, sales slowed in 2023, with only 51 over the course of the year — the lowest number in more than 10 years, according to the report.
The report noted signs of hope for the industry, including the British manufacturer JCB’s plan to build a local facility that could employ more than 1,500 workers within five years, expanding the tenant base. However, 2024 will likely be a “rocky” year for the industry, the report said.
